Is the Prospect of WTO Promising?

Tuesday, August 5, 2008

Abdolreza Ghofrani

The main objective of the WTO is to encourage member countries to realize a global free trade system that is eventually to their best interests. Before this organization was established, economists estimated that if the principles of the free trade system this world body has provided for, be actually executed, it would raise trade volume as much as 300 billion dollars.

Thus, the new system would lay a terrific ground for all countries, and in particular developing as well as less developed nations to actualize their development plans.

One of the most important and key devices to that objective has been to lower and eventually lift up trade barriers, allowing global trade to flow freely and all countries, however rich or poor, benefit from the promotion of trade and reduction of the expenses it ensues.

How far the barriers would go down depended on the agreements the governments reached. Other than this principle, non-discrimination and producing stable transparent and predictable conditions for free trade were among the serious principles that governments were advised to strictly observe.

These principles have been insistently declared in the preamble of WTO Agreements concluded in Morocco in December 1994 and were effective as of 1 January 1995 and 134 signatories were committed to implement the contents of those agreements after being ratified by their legislative bodies.

WTO actually substituted GATT (General Agreement for Trade and Tariffs). To reach these agreements, the signatories had painstakingly spent nearly a decade on negotiations called “Uruguay Round“.

Now after fourteen years the questions remains to be raised as how far this fledgling global organization has reached the objectives set it the preamble of the aforementioned agreement. Undoubtedly there are some problems that somewhat have impeded in the course of the implementation of the trade agreement.

In 2001 Doha Ministerial Meeting, the developed and developing member countries could not concur to implement the trade agreement. It was just because either side was determined (and still is) to safeguard its farmers, and the developing nations have been very strict on tariffs on sensitive agricultural products.

On the other side, developed members did not want to abandon their agricultural protection policy they have implemented through subsidies to their farmers. Therefore, the meeting called the “Doha Round“ could not achieve the desired results at which the talks aimed.

Now after seven years of WTO Director General's exhausting efforts to help bring about neoliberal global economy and lift millions out of poverty ends in a 'collective failure' and the World Trade Organization ministerial summit on trade liberalization ended last Tuesday in Geneva with a shocking blow to the third world.

WTO has, however, had such fiascos through the past 13 years. In 2003, there was a conflict between the United States on one side and European and Asians on the other on the tariffs on textiles products.

At that time WTO ruled that the act of protectionism, which had been in force for nearly two years in US, was illegal. The trade body, hence, authorized the Europeans and Asians to take retaliatory measures by levying tariffs on commodities being imported from the United States.

To avoid grave international consequences, or in an economist's words the “war of tariffs”, US accepted WTO decision and a global economic crisis was prevented. This achievement was solely because of good WTO offices.

Definitely no one has forgotten the Seattle debacle in December 1999.At that time some pessimists believed that this episode could have undermined the very existence of the trade body. They were wrong and WTO has kept moving.

However, there is no doubt that WTO can achieve its goal set in the 1994 agreement. Certainly any international organization has had challenges and opportunities in its course. The United Nations, after more than sixty years, now still needs to sail in rough seas, however it has never given up and in spite of many difficulties and even disasters, and it has advanced its goals and has gained momentum and power that can influence global developments although there are many future challenges it has to embrace.

WTO is not an exception and it certainly, overtime, can overcome challenges as well. Globalization is gaining momentum and integration of all countries into the World Trade Organization is unavoidable.

One should not lose sight of the fact that unless all countries and particularly developing nations accede to this international trade body, having equal and non-discriminate rights and the position they deserve to voice, there should be no promising prospect for the accomplishment tasks assigned to it.

There is no doubt that newly acceded countries as well as those still waiting to come in deserve help to embrace the conditions needed for the implementation of the built-in agenda of WTO.

The most important point that these countries should not ignore is the special and differential treatment (SDT). The existing members of WTO and especially the powerful economic members should not take this fact for granted. Because this organization is highly based on interdependence and interaction.

No member country's interests are served unless it takes into account those of others'. The spirit and letter of WTO is mutual understanding and cooperation, so developing countries and the economies in transition should not be denied, otherwise the repetition of the Doha Round, Geneva and Seattle debacle is inescapable and certainly will not serve the goals of WTO.

There are still nearly thirty countries so far which have not been acceded to the organization. This is not because they are not either economically qualified or eligible for accession. Their application for acceptation has been waiting to be placed on the working group agenda for years.

Unfortunately, in this, political observations have been involved. WTO is thoroughly a trade organization with barely economic characteristics and certainly with influence of political observations in its decision making process will be pretty unproductive that will never serve the aspiration of the Maghreb Agreement and eventually cannot contribute to global economic stability. Definitely, the imposed isolations of countries which have not been acceded to the body are quite unnecessary and unfair and the process of their accession needs to be sped up.

An important point is that sometimes WTO is referred to as a “cartel“. Occasionally, there are believes that a kind of polarization has shaped up within the organization, consisting of a group of certain developed and rich countries. Calling WTO a “cartel” is meaningless. It is quite clear, that a “cartel” monopolizes everything and merely serves the interests of certain groups and countries.

Conversely, WTO is not seeking the interests of a few but its main task is to serve all countries of the world and contribute to their development and prosperity through free trade. That is why it is open for the accession of all countries. It is not polarized, because we can see all countries, regardless of being economically powerful or weak are, able to negotiate with no restrictions on an equal basis.

Once, Dr.Supachai Panichpakdi, former Secretary General of the World Trade Organization, made very wise and meaningful points. ”Although” he said ”the big economic powers and members of WTO so far have or are exerting influence within the organization, they need to appreciate that overtime and with the accession of China and other powerful regional arrangements, their influence will be subdued and there must be more balanced influence that is they are no longer will have the final say in decision making”.

To avoid the debacle WTO experienced in Seattle, he added the organization is working out a scheme that could settle the disputes may arise in forthcoming Conference. (He was referring to the Ministerial Conference in Doha November 2001).

These prove that all countries either developed or developing should take a realistic stand if they are truly determined to serve the global economic prosperity and free trade that will eventually lead to their own national interests and economic prosperity.